Increasing Hawai'i's energy self-sufficiency and requiring local oil companies to report their profits will do more to improve gasoline prices than any reinstated gasoline "price caps."

The Legislature finally realized last session that the so-called gas cap was hurting the economy significantly and was hurting consumers because it was a cap on the wholesale price of gas. It did not directly affect what could be charged at the pump, and that's what really matters to consumers.

The Legislature this year passed a new reporting requirement for the local oil companies. The new detailed reporting requirement will give us a better idea over the next year of how much money is being made by the oil refineries and how the retail price of gasoline is affected by wholesale prices, other costs and global factors.

The state Department of Business, Economic Development & Tourism has consistently pointed out that the regulation of gasoline prices is more harmful than helpful to consumers. The department's study of the four months of the gas cap experiment showed that the gas cap-induced prices cost Hawai'i's consumers an estimated $50.1 million more than they would have paid if the caps had not been imposed.

An analysis recently completed by the state Public Utilities Commission found that Hawai'i gas prices averaged 34 cents per gallon more than the Mainland before the gas cap. While the gas cap was imposed, the price spread jumped to 39 cents more per gallon. Since the cap was removed by an overwhelming vote by the Legislature, the average difference between the Mainland and Hawai'i has returned to about 34 to 35 cents per gallon, in line with the historic averages.

Any gas cap formula that ties Hawai'i's prices to other markets will import the price volatility of those markets to Hawai'i. Last week's military coup in Thailand caused a spike in the Singapore spot prices, which would have led to higher prices in Hawai'i under the revised gas cap formula passed by the Legislature.

Gov. Linda Lingle's long-term "Energy for Tomorrow" legislative package proposed real solutions by focusing on reducing Hawai'i's dependence on imported petroleum. These initiatives include encouraging alternative fuels such as biodiesel and ethanol, as well as the use of hybrid vehicles and fuel-efficient automobiles and trucks. She has directed the state to "lead by example" by changing the type of vehicles in the state fleet to hybrid and fuel-efficient cars, vans and trucks.

Additionally, the governor has championed transparency in the reporting of information by local oil companies. A stringent monitoring program along with a petroleum information system and database creates more accountability in the local oil industry. The Legislature agreed that this was an important step, passing a bill to give the PUC this authority. However, the Legislature only provided $1 to implement this new program.

The PUC this coming year will seek the resources it needs to implement the new transparency system. We hope the Legislature will recognize and give the PUC the funds it deserves to inform consumers about competition and profits in the oil industry.

Theodore E. Liu is director of the state Department of Business, Economic Development & Tourism. He wrote this commentary for The Advertiser.